Water intrusion in a basement is a common issue that affects thousands of properties across Ontario. If not detected in a timely manner, it can cause significant property damage and lead to costly legal disputes.
Specifically, during spring, properties experience an increase in occurrences of basement water infiltration. Therefore, it is crucial to know one’s rights and duties when dealing with a wet basement situation.
A. Duty of Buyers
The law is clear that a buyer who does not protect himself through a contract or inspection is, without remedy, absent fraud.[1] Buyers before purchasing a property, therefore, must protect themselves through either an express warranty or by an independent examination of the property.[2]
In Ontario, the Agreement of Purchase and Sale (‘APS’) by the Ontario Real Estate Association (OREA) is the standard document used in real estate transactions. Parties can negotiate the survival of a clause after the closing of the transaction.
A prudent approach involves conducting thorough inquiries into any plumbing or drainage issues that might impact the basement, including past problems, renovations, or repairs. It is advisable to include a representation in the Agreement of Purchase and Sale (APS) that explicitly addresses the condition of the basement, using clear and precise language, surviving the closing.
Buyers must also be aware of a longstanding doctrine of “buyer beware” or “caveat emptor” –
Absent fraud, mistake or misrepresentation, a purchaser takes existing property as he finds it, whether it be dilapidated, bug-infested or otherwise uninhabitable or deficient in amenities, unless he protects himself by contract terms.[3]
The distinction between patent and latent defects becomes relevant here. Caveat emptor applies to patent defects, which are faults in the physical quality of real property that are perceivable by inspection and ordinary due diligence by the purchaser.[4] On the other hand latent defects are hidden defects that cannot be discovered by a general home inspection.
B. Duty of Vendors
Vendors have a duty to disclose any latent defect that they have knowledge of, that makes the premises dangerous or unfit for occupation.[5] In addition, they can be held liable for defects that they are willfully blind of or actively conceal. In such scenarios, vendors cannot pass the blame on the buyers by relying on the doctrine of caveat emptor.
Vendors must be mindful to honestly and truthfully disclose information in relation the condition of the property in the Seller Property Information Statement (SPIS), in case they decide to provide one. Although, SPIS can be used by vendors for potential legal issues, it is an important consideration for buyers and can help attract a better price for a property. It is always better to consult a lawyer if you are not sure if you want to fill out an SPIS.
C. Duty of Neighbors
Neighbours owe a duty of care to each other not to use their respective properties in a way that would pose a foreseeable risk to another’s property and cause it damage.[6]
Improper re-routing of sump pump water, inadequate grading or placement of downpipes, failure to maintain drainage channels and private water lines, and obstruction of culverts by neighbors are examples that can lead to liability claims, including strict liability, negligence, and nuisance.
Strict liability is imposed when there is a non-natural use of one’s land. Instances that might give rise to strict liability include alternating natural topography of a property reducing the natural flow of a stream, discharging an unreasonable amount of water into a channel, bringing a large quantity of water onto the property,[7] amongst others.
In contrast, a situation wherein the water naturally accumulates and then runs off into the neighbour’s property might give rise to a nuisance claim. [8] Nuisance occurs where there is substantial and unreasonable interference with the use or enjoyment of one’s property by another. Physical damage to one’s property or diminution in its market value or significant alteration in the intended use of the one’s property can give rise to a claim for nuisance.
In Warren v. Gluppe, the defendant was found liable to the neighbor for failing to (i) properly manage the water discharge from his sump pump, (ii) maintain his septic system, and (iii) repair his eavestroughs to reduce water saturation along the property line.[9]
D. Duty of Builders
Builders, contractors and architects can be held liable to subsequent purchasers of a property in case of negligent construction if it can be shown that it was foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of the occupants.[10]
In this regard, the standard of care is measured by the standards set by the Ontario Building Code for building construction.[11] The Code, however, sets at best, the minimum standards. Builders may still be liable despite compliance with the Code for negligent construction.
Another duty on builders is imposed by the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31. It provides a legislative warranty scheme wherein builders are required to provide buyers the following representations and warranties as per Section 13(1) –
(a) that the home,
(i) is constructed in a workmanlike manner and is free from defects in material,
(ii) is fit for habitation, and
(iii) is constructed in accordance with the Ontario Building Code;
(b) that the home is free of major structural defects as defined by the regulations; and
(c) such other warranties as are prescribed by the regulations.
In order to avail of this warranty, homeowners must be mindful that they do not make any alterations, additions or deletions in their basements before filing for a warranty claim. Additionally, a warranty claim will fail if the damage is caused dampness or condensation due to failure to maintain adequate ventilation
E. Duty of Municipality
The Court of Appeal for Ontario in Oosthoek v. Thunder Bay (City)[12], dealt with an issue wherein the local residents suffered damages to their property due to flooding of their basements due to a heavy rainstorm, as well as bursting, leaking and corroding of cast iron pipes maintained by the municipality. The Court held that the municipality was liable for negligence and nuisance as they failed in their duty to enforce by-laws.
Similarly, in Buysse et al. v. Town of Shelburne Grant v. Town of Shelburne[13], residents suffered from property damage due to sewer water backing up into their basements. This was caused by a malfunction of the pumps at the municipal pumping station. The Court held the municipality liable for nuisance.
With the passing of the Municipal Act, claims against municipalities for nuisance are barred by virtue of Section 449. The section stipulates that “no proceeding based on nuisance, in connection with the escape of water … from water works (facilities for the collection, production, treatment, storage, supply or distribution of water), shall be commenced against a municipality …”
The immunity against nuisance does not preclude municipalities from a cause of action arising out of a statute or from an obligation to pay compensation created by statute. Additionally, nuisance claims can be brought if the cause of action arose before December 14, 1996.
However, municipalities may still be found liable for negligence. Municipalities have a duty to enforce building codes. They might be held liable for being negligent in granting a building permit and/or conducting inspections during constructions of homes.
F. Duty of Professionals
Professionals, such as real estate agents and home inspectors, also owe a duty of care, “being the exercise of the skill and care expected of a prudent professional in similar circumstances.”[14]
Real estate agents are expected to exercise due diligence, make sufficient inquiries and obtain knowledge about the construction of the property. Obtaining an SPIS from vendors does not absolve agents from their responsibility.
For home inspectors, the standard of care is decided on a case by case basis and is dependant on experience of the inspector, fees paid, information available, etc. Home inspectors are also expected to have knowledge pertaining to building, building codes, and municipal by-laws.[15] Determination of the cause of water infiltration in your basement—be it due to poor drainage, a broken water line, extreme weather, or a foundation crack—is essential and the first step before identifying the liable party for recovery of damages.
At Northern Law LLP, our seasoned lawyers are equipped to help you gather necessary records and offer a comprehensive evaluation of your case. Should it be required, we can also assist in initiating a lawsuit. Our team has extensive experience in both prosecuting and defending claims of this nature. Contact us today at (705) 222-0111 or info@northernlaw.ca.
[1] Fraser-Reid v. Droumtsekas, 1979 CanLII 55 (SCC), [1980] 1 S.C.R. 720, at p. 720.
[2] Carleton Condominium Corporation No. 32 v. Camdev Corporation (1999), 1999 CanLII 2909 (ON CA), 124 O.A.C. 352 (C.A.), at para. 4.
[3] McGrath v. MacLean et al. (1979), 1979 CanLII 1691 (ON CA), 22 OR. (2d) 784 (C.A.), at p. 791, quoting then Prof. Bora Laskin in “Defects of Title and Quality: Caveat Emptor and the Vendor’s Duty of Disclosure” (1960), Law Society of Upper Canada, Special Lectures, p.389 at pp.403-4.
[4] Gebre-Hiwet v. McPherson, 2022 ONSC 1421.
[5] Vieira v. Dawson, 2018 ONSC 413; Cotton v. Monahan, 2010 ONSC 1644; Guglielmi v. Russo, 2010 ONSC 833 (Div. Ct.).
[6] Alfarano v. Regina, 2010 ONSC 1538 (CanLII), <https://canlii.ca/t/28kvw>, para. 69.
[7] Warren v. Gluppe, 2023 ONSC 6301 (CanLII), <https://canlii.ca/t/k1261>, para. 63, 64.
[8] Warren v. Gluppe, 2023 ONSC 6301 (CanLII), <https://canlii.ca/t/k1261>, para. 63, 64.
[9] Warren v. Gluppe, 2023 ONSC 6301 (CanLII), <https://canlii.ca/t/k1261>, para. 7.
[10] Winnipeg Condominium Corporation No. 36 v Bird Construction Co. 1995 CanLII 146 (SCC), 1995, 1 SCR 85.
[11] Wesley v. Geneau, 2020 ONSC 868 (CanLII), <https://canlii.ca/t/j5s8l>, para. 68.
[12] 1996 CanLII 1530 (ON CA).
[13] 984 CanLII 2020 (ON SC), <https://canlii.ca/t/g18tv>
[14] Gebre-Hiwet et al v McPherson, 2022 ONSC 1421 (CanLII), para. 77.
[15] Gebre-Hiwet et al v McPherson, 2022 ONSC 1421 (CanLII), para. 80-82.